Correlation Between Flagship Investments and Scentre

Can any of the company-specific risk be diversified away by investing in both Flagship Investments and Scentre at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Flagship Investments and Scentre into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flagship Investments and Scentre Group, you can compare the effects of market volatilities on Flagship Investments and Scentre and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Flagship Investments with a short position of Scentre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flagship Investments and Scentre.

Diversification Opportunities for Flagship Investments and Scentre

-0.16

Correlation Coefficient

Flagship Investments  Scentre

Good diversification

The 3 months correlation between Flagship and Scentre is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and Scentre Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scentre Group and Flagship Investments is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Flagship Investments are associated (or correlated) with Scentre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scentre Group has no effect on the direction of Flagship Investments i.e., Flagship Investments and Scentre go up and down completely randomly.

Pair Corralation between Flagship Investments and Scentre

Assuming the 90 days trading horizon Flagship Investments is expected to generate 1.09 times less return on investment than Scentre. In addition to that, Flagship Investments is 1.12 times more volatile than Scentre Group. It trades about 0.04 of its total potential returns per unit of risk. Scentre Group is currently generating about 0.05 per unit of volatility. If you would invest  257.00  in Scentre Group on September 14, 2024 and sell it today you would earn a total of  91.00  from holding Scentre Group or generate 35.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Flagship Investments  vs.  Scentre Group

Flagship Investments

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Flagship Investments are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Flagship Investments unveiled solid returns over the last few months and may actually be approaching a breakup point.

Scentre Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scentre Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Scentre is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Flagship Investments and Scentre

The main advantage of trading using opposite Flagship Investments and Scentre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flagship Investments position performs unexpectedly, Scentre can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Scentre will offset losses from the drop in Scentre's long position.

The idea behind Flagship Investments and Scentre Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..